Question

An investor puts $2,500 into a life insurance policy that pays 10% simple annual interest. If no additional investment is made into the policy, what is the total amount the investor should expect at the end of 5 years?

A) 125

B) 3,750

C) 1,250

D) 2,625

Answer 1

$3750

Explanation:

Amount = principal + interest

Simple interest = Principal *Rate * time/100

Simple interest = 2500*10*5/100

Simple interest = 25*50

Simple interest = $1250

Amount = $2500+$1250

Amount after 5 years is $3750